Proposal to impose fee on ATM usage unjustified

It is said that there are no free lunch in the economy. The banks are likely to limit the number of free transactions a person can make at his own branch’s ATM to five. Beyond this he will have to pay a fee for transacting at ATM. Recently, banks were asked to beef up security at ATMs after a woman was attacked in Bangalore inside the ATM premises. The Karnataka government had then asked banks to deploy guards at ATMs or else close those kiosks which are unmanned. The banks association then decided to go for a partial closure of ATMs at night. They also planned to deploy security at ATMs and install CCTV camera outside the entrance of the kiosks.

Since banks will have to spend around 40,000 per month per ATM hence they decided to charge a fee on customers using these machines. Many of them were saying that increasing security will increase input costs and hence customers will have to pay for using ATMs beyond five transactions limit. The Indian Banks Association has supported an increase in charges that banks pay each other when their customers use third-party ATMs from Rs 15 to Rs 18. At present, most banks do not charge account holders if they use the bank’s own ATMs. The ATM network of banks is currently around 1.4 lakh and is expected to increase to around 2 lakh in six months. The banking industry is split on charging customers for ATM usage as some banks feel that the move may prove counterproductive.

The RBI is examining this issue but it is not in favour of charging customers for using ATMs at home branches. Many other institutions too are saying that this will only move customers to the branches and thereby increasing banking costs. Since branch banking is costly hence financial experts have been saying that more customers will start crowding at bank branches thereby increasing the workload of bank officials and increasing costs. The Finance ministry too is not in favour of banks charging their own customers for ATM usage. On the other hand, the proposed fee will create a huge inconvenience to customers as they will have to use ATM networks very carefully. They may have to withdraw more money and keep it at home which is risky.

Students residing in hostels will suffer the most as they will have to keep more money with them as there is a possibility of theft. It will also create huge problems for businessmen who need to withdraw lumpsum money on a day to day basis. ATMs were set up for providing more facilities to customers and reduce the rush at bank branches. It is the banks’ responsibility to provide security at ATM kiosks and it should not be passed on to customers. Instead of capping the ATM transactions, banks could levy a onetime fee annually which would be more feasible.